Sims, in the matter of Pubboy II Pty Limited

[2008] FCA 1000

FEDERAL COURT OF AUSTRALIA

Sims, in the matter of Pubboy II Pty Limited [2008] FCA 1000

IN THE MATTER OF PUBBOY II PTY LIMITED & ORS, ANTHONY MILTON SIMS

NSD 926 OF 2008

EMMETT J

24 JUNE 2008

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 926 OF 2008

IN THE MATTER OF PUBBOY II PTY LIMITED & ORS,

ANTHONY MILTON SIMS Plaintiff
JUDGE:	EMMETT J
DATE OF ORDER:	24 JUNE 2008
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to section 503 of the Corporations Act2001 (Cth), that Anthony Milton Sims be removed as liquidator of the following companies which are in liquidation:

(a)              CBD Hotel Newcastle Nominees Pty Limited ACN 119 998 015 (Receivers & Managers Appointed) (In Liquidation)

(b)             The Lawson Park Hotel Nominee Pty Ltd ACN 109 224 740 (Receivers & Managers Appointed) (In Liquidation)

(c)              The Paxton Hotel Pubboy Nominees Pty Limited ACN 121 829 070 (Receivers & Managers Appointed) (In Liquidation)

(d)             Alpine Hotel Cooma Nominee Pty Limited ACN 123 827 181 (Receivers & Managers Appointed) (In Liquidation)

(e)              Belmore Hotel Pubboy Nominees Pty Ltd ACN 124 837 029 (Receivers & Managers Appointed) (In Liquidation)

(f)              8833 Investments Pty Ltd ACN 105 880 448 (Receivers & Managers Appointed) (In Liquidation)

(g)              Pubboy II Pty Ltd ACN 121 045 752 (Receivers & Managers Appointed) (In Liquidation).

2.Pursuant to section 502 of the Corporations Act2001 (Cth), that Trevor Mark Pogroske be appointed as liquidator of the following companies which are in Liquidation:

(a)CBD Hotel Newcastle Nominees Pty Limited ACN 119 998 015 (Receivers & Managers Appointed) (In Liquidation)

(b)The Lawson Park Hotel Nominee Pty Ltd ACN 109 224 740 (Receivers & Managers Appointed) (In Liquidation)

(c)The Paxton Hotel Pubboy Nominees Pty Limited ACN 121 829 070 (Receivers & Managers Appointed) (In Liquidation)

(d)Alpine Hotel Cooma Nominee Pty Limited ACN 123 827 181 (Receivers & Managers Appointed) (In Liquidation)

(e)Belmore Hotel Pubboy Nominees Pty Ltd ACN 124 837 029 (Receivers & Managers Appointed) (In Liquidation)

(f)8833 Investments Pty Ltd ACN 105 880 448 (Receivers & Managers Appointed) (In Liquidation)

(g)Pubboy II Pty Ltd ACN 121 045 752 (Receivers & Managers Appointed) (In Liquidation)

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY		NSD 926 OF 2008
IN THE MATTER OF PUBBOY II PTY LIMITED & ORS,
ANTHONY MILTON SIMS Plaintiff
JUDGE:	EMMETT J
DATE:	24 JUNE 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This application has been made by Mr Anthony Sims, who is the liquidator of seven companies, namely, Pub Boy II Pty Limited, CBD Hotel Newcastle Nominees Pty Limited, The Lawson Park Hotel Nominee Pty Limited, the Paxton Hotel Pubboy Nominees Pty Limited, Alpine Hotel Cooma Nominee Pty Limited, Belmore Hotel Pubboy Nominees Pty Limited and 8833 Investments Pty Limited (the Companies).

2. On 15 February 2008, Mr Sims was appointed administrator of the Companies pursuant to section 436C of the Corporations Act 2001 (Cth) (the Act) by Australia and New Zealand Banking Group Limited (ANZ). On the same day, ANZ appointed Mr Stephen Parbery and Mr Jack Bournelis as receivers and managers of each of the Companies pursuant to charges granted by the Companies to ANZ. Each of the receivers is a partner in the accounting firm known as PPB. On 1 April 2008 creditors of each of the Companies resolved that the respective Companies be wound up and Mr Sims was appointed liquidator of each of the Companies pursuant to ss 446A and 499(2A) of the Act.

3. The Companies own various hotel premises, which are in the process of being sold.  Up to the present time, ANZ has provided funding to meet the remuneration and disbursements of Mr Sims in the administration and liquidation of the Companies.  There are otherwise no available funds in the liquidations, since the value of the Companies’ assets will not exceed their liabilities to ANZ secured by its charges. 

4. The firm of which Mr Sims is a partner, Sims Partners, proposes to merge with PPB with effect from 1 July 2008. With effect from that time, Mr Sims will be carrying on practice in partnership with the receivers. Accordingly, he will be prohibited by s 532(2) of the Act from acting as liquidator of the Companies for so long as Mr Parbery and Mr Bournelis remain as receivers.

5. Section 532(2) of the act provides a person must not act as a liquidator of a company if, relevantly, the person is a partner, employer or employee of an officer of the company. Under s 9, an officer of a corporation means, relevantly, a receiver or receiver and manager of any property of the company. Section 532(2) provides for an exception where the leave of the Court is granted. However, Mr Sims does not consider that it is appropriate that he continue as liquidator of the Companies, since there could well be a real conflict between one of the Companies and its unsecured creditors, on the one hand, and ANZ, as a secured creditor, on the other. In the event of such a conflict, the duties of the receivers and of the liquidator would be opposed.

6. In the circumstances, Mr Sims seeks to be removed as liquidator and further asks the Court to appoint Mr Trevor Pogroske as liquidator of each of the Companies.  Mr Pogroske has consented to be appointed as sole liquidator of each of the Companies.  ANZ has also agreed to provide funding to meet remuneration and expenses that might be incurred by Mr Pogroske as liquidator of each of the Companies. 

7. Section 503 of the Act provides that the Court may, on cause shown, remove a liquidator and appoint another liquidator. The language of s 503, on its face, may indicate that it is to operate where a liquidator has been shown to have acted with impropriety. However, clearly enough, sufficient cause is that a liquidator is in a position of conflict such that he is prohibited from acting as liquidator without the leave of the Court. Mr Sims, as I have said, does not wish to seek the leave of the Court; nor, because of the absence of funding, does he seek to obtain the consent, to the extent that it is possible, of the unsecured creditors.

8. Clearly enough, a liquidator, in performing his functions, must both be and appear to be independent and impartial.  For the reasons I have given, Mr Sims does not consider that he can satisfy that requirement.  Mr Sims has notified Australian Securities Investments Commission of his proposed application and the Commission has indicated that it does not propose to intervene in this proceeding or appear at the hearing today.  Mr Sims has also indicated that the cost of this application will be borne by his firm, and not by the creditors of the Companies.  In the circumstances, I propose to make the orders sought.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:        21 July 2008

Counsel for the Applicant:	Ms L Gallate
Solicitor for the Applicant:	Kemp Strang

Date of Hearing:	24 June 2008
Date of Judgment:	24 June 2008